Big city jobs boom hurts housing, and other cities: Study

Four U.S. cities have reshaped what the job market looks like, according to a recent report from the Brookings Institution, which adds to a nationwide housing crunch, and takes away from smaller cities.

According to Brookings, New York, Chicago, San Francisco and Seattle accounted for over 90% of the increase in job density between 2004 and 2015. During that time frame, these four cities attracted the bulk of new job openings by over 40%, moving from an average of 65,813 to 92,000 jobs per square mile.

In the 94 metropolitan areas surveyed by Brookings, job density increased, on average, from 20,068 jobs per square mile to 25,664.

Rising job density is generally a good sign, as big cities draw an influx of new residents. However, these same areas are suffering from an increasingly sparse supply of affordable housing, which means available jobs are going unfilled.


Meanwhile more affordable locations aren’t seeing the same levels of open jobs, or candidates to fill them. Only half of the 94 cities surveyed by Brookings saw rising job density, while the others spiraled. According to economists, this is a concerning sign.

“Dense areas disproportionately captured more of the job growth,” Chad Shearer, one of the authors of the report, authored by the Bass Center for Transformative Placemaking, told Yahoo Finance in a recent interview.

“For those metropolitan areas that aren’t keeping up with that density trend, it’s a missed opportunity,” he added.

‘Clean sidewalks, trees matter’

Youngstown, OH, Sacramento, CA, Rochester, NY, New Haven, CT, and Cape Coral, FL sat at the bottom of Brookings’ report, with each metropolitan area losing job density by over 30%.

The drop suggests that all of these cities are sprawling, or moving outward into the suburbs. Meanwhile, places like Honolulu, San Jose, CA, Charlotte, NC, and Albany, NY all sit near the top of the densification trend — along with San Francisco and New York.

According to Shearer, cities with increasing job density have benefitted from decades of investment in public spaces and infrastructure.

“Places need to be more thoughtful and intentional about where their jobs are growing, and trying to make sure that to the extent that it’s possible, jobs are locating closer together and not further apart,” Shearer said.

“Streetscapes matter. Clean sidewalks, clear sidewalks, trees, these improvements in the livability of the city that make it a nice place to spend time.”

Currently, many U.S. cities have more than 75 percent of their land zoned exclusively for detached single-family homes.

Yet as jobs become increasingly clustered in major cities, demand for housing goes up as well. and these zoning policies put more stress on the housing market. The surge in demand has sent rents and property prices skyrocketing in San Francisco and New York in particular. In those cities, fierce debates rage over the construction of new housing that is necessary to hold new residents.

And simply up-zoning may not be enough in places with booming demand. New York, for example, only has 15% of its land zoned exclusively for single-family homes.

If current trends continue, cities that are economically successful will have jobs clustered closer together. Housing policy will have to catch up with these and other trends, experts say.

“Density is a really important driver of economic growth, of civic participation and fiscal health, and of environmental sustainability and public health outcomes. This is a really important topic at a really important time,” said Shearer.

Calder McHugh is an Associate Editor at Yahoo Finance. Follow him on Twitter: @Calder_McHugh.

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